The functional anatomy of the bidirectional promoter of the human dihydrofolate reductase (DHFR) gene has been studied by an in vivo transient assay using the firefly luciferase gene as a reporter. We have recently identified a gene located immediately upstream from the DHFR gene that encodes a protein highly homologous to a bacterial DNA mismatch repair protein, Mut S, and therefore, we have named it the mismatch repair protein (MRP). The DHFR gene and the MRP gene are arranged in a head-to-head configuration separated by an 88 base pair segment and the expression of these two genes are regulated by a short bidirectional promoter. Deletion and substitution analyses have shown that the 109 base pair fragment is sufficient for bidirectional promoter activity. A sequence CACAAATA, that is the only AT rich segment of the DHFR promoter, is not required for promoter activity. However, the GC box, GGCGGG plays an important role in expression of both divergent genes. All four GC boxes in the promoter are functionally shared and modulate both transcriptional activities. Particularly, a GC box located in the center of the two genes is essential for bidirectional activity. Elements at the transcriptional start site are also required for correct initiation. Spacing between the GC box and the start site elements affect both the position and efficiency of transcription initiation.